‘We go straight to the publisher’: Buyers beware of SSPs arbitraging inventory
By Ross Benes
A publishing executive, speaking under the condition of anonymity, recently told a story that has industrywide implications. Despite putting only 20,000 daily video impressions in the open market, this executive said, some advertising partners had purchased over 100,000 daily video impressions that they had believed belong to the publisher.
A few advertisers seeking cheap inventory fell for this trick on more than one occasion. They came to the publisher for some sort of solace after they realized that they had purchased garbage.
“If someone is dumb enough on the agency side to think they are getting our inventory on an open market without talking to us, then let them waste their fucking money,” the exec said. “It is buyer beware on the open market.”
As the publisher’s anecdote suggests, tech middlemen have been known to have a habit of misrepresenting themselves. Supply-side platforms (SSPs) do this through reselling inventory and misstating which publishers they represent. To get around this problem, publishers say they must be clear in their contracts how vendors utilize their inventory, and buyers suggest dealing directly with publishers and using blacklists.
For years, ad networks have used misleading descriptions and fudged to truth to buyers about the sites they have inventory access to. By engaging in arbitrage, the networks were able to repackage and resell inventory that they claimed belonged to publishers that they never had relationships with. As PubMatic CMO Jeffrey Hirsch put it, “This has been an industry issue for some time, dating back before the advent of SSPs.”
Although many publishers have left ad networks by the wayside, this issue still crops up in other tech integrations such as SSPs. Sources told Digiday that publishers looking to get higher CPMs on the open market disregarded where their inventory wound up, as long as it drove higher rates.
Publishers also incentivized reselling whenever they oversold their inventory. For example, if one publisher doesn’t have enough inventory to meet an order, it may buy inventory from another publisher and package the inventories together. This MacGyver-esque approach to cobbling together inventory can help publishers get through rough patches, but it can also be annoying and create opaqueness for other parties involved in the deal.
“SSPs who daisy-chain inventory are adding to the problem by creating superfluous ad tech tax while delivering little to no value,” said John Donahue, chief product officer of SSP provider Sonobi.
Sources emphasized that it is really difficult to discern which vendors are simply reselling inventory they purchased through other SSPs and which vendors are straight up lying about what they have. Research on this subject is scant, but it is confirmable that a lot of the reselling happens in the long tail of traffic.
Data from ad tracking firm Pathmatics shows that, on average, the top 50 publishers (in terms of ad impressions) work directly with five inventory partners (e.g., SSP, ad networks and exchanges) and indirectly with an additional three partners who represent at least 1 …read more